Hindenburg Omen hovers over Wall Street

Are Wall Street traders a particularly superstitious group, or does the ominously named Hindenburg Omen really portend a stock market crash?

Financial analysts noticed a series of Hindenburg Omen signals in July and August, the likes of which has historically meant an increase in the chances of a market downturn.

The Omen -- a complex series of technical factors involving a number of S&P 500 stocks hitting 52-week highs and lows within a brief period that often precedes a downturn -- is named for the Hindenburg disaster of 1937, when the famous airship exploded mid-air.

Omen signals, when they come in clusters, have often correlated with bad news for the markets. But history shows the downturns, if they come at all, likely won't come right away. Moreover, some researchers suggest the correlation between Omens and downturns might simply be a cast of statistical over-fitting.

Still, the multiple occurrences have analysts worried. Jason Goepfert, of Sundial Capital Research, said clusters as significant as the one ongoing last happened in January and February of 2000 and July and March and April of 2006, both of which ended up foretelling big-time financial pain.

“That’s a heavy concentration that we haven’t seen too many other times over a span of nearly 50 years,” Goepfert said. “And when we have, it hasn’t been good.”
"Two precedents don't make a pattern," said UBS floor operations director Art Cashin, "but that sure makes that 'check engine' light glow much, much brighter."

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